Abstract
This paper revisits the question of whether the second-best level of public good provision is lower than the first-best level in a standard model of public good provision with identical consumers. The role played by the complementarities between the public good and the private commodities is clarified. Furthermore, it is shown that the second-best level is indeed below the first-best level if the Hicksian demands for the taxed commodities are independent of the level of public good provision.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.